State government’s deal with the American Federation of State, County and Municipal Employees to save $70 million on health care costs relies partly on creation of a new option for dental care and changes in how the state pays for prescription drugs.

CHRIS WETTERICH

State government’s deal with the American Federation of State, County and Municipal Employees to save $70 million on health-care costs relies partly on creation of a new option for dental care and changes in how the state pays for prescription drugs.

The change workers could notice the most is that the state wants them to try generic prescription drugs before brand-name ones.

The program, called “preferred drug step therapy,” is estimated to save the state $11 million, according to the agreement. Workers needing prescription drugs would, in some instances, have to try the cheaper generic or preferred drugs before the state would pay for more expensive, brand-name medication.

Medco, the state’s pharmacy benefit manager, would review a worker’s medical history to see whether the generic medication had been tried in the last 18 months. Those who had tried such drugs but switched to brand-name drugs would be grandfathered in.

If a doctor shows evidence to Medco that the more expensive drug will work better, a patient can continue using that drug.

“In most instances, this program will provide cost savings to both the state and plan participants,” according to the agreement the state signed with AFSCME.

The drug plan will allow for “smarter purchasing to save money for taxpayers without eroding the quality of health care or their (workers’) access to it,” AFSCME spokesman Anders Lindall said last week.

The state also hopes to save $15 million by establishing a dental preferred provider organization for the first time. A PPO provides services at discounted fees within a network of dentists under the states Quality Care Dental Plan. Using the PPO would be optional for all state workers, according to the state Department of Human Services.

“This should provide substantial savings to both the state of Illinois and to covered individuals who choose to participate in the PPO,” the agreement said.

The state wants to have the PPO in place by July 1, 2011. Details won’t be unavailable until a contract is signed, according to DHS.

Other areas of expected savings include:

-- More than half of the estimated savings in the AFSCME deal, $36.6 million, is to come from re-negotiation of the state’s contract with its pharmacy benefit management firm, Medco Health Solutions. The new Medco contract went into effect on July 1.

--$1.8 million by changing the percentage it pays for co-insurance. Currently, the state has three different percentages – 90 percent for in-network services and 80 percent and 65 percent for out-of-network services, depending on the service.

Under the agreement, all in-network services will continue to be covered at 90 percent while out-of-network services will be set at 70 percent. Under state and federal law, some services, such as 100 percent coinsurance for certain preventive services, are required to be covered at a higher percentage. Those would be unaffected by the change.

--$4.9 million by streamlining the maximum amount of money patients have to pay out of their own pockets into two categories – in-network and out-of-network.

-- $1.4 million by implementing the new co-insurance and out-of-pocket maximums at the same time.

The health-care agreement, signed earlier this month, is the first part of a two-part agreement Gov. Pat Quinn has signed with AFSCME. In exchange for the savings, the state has agreed not to re-open the part of AFSCME’s contract dealing with health care.

The second part has been signed, according to Kelly Kraft, spokeswoman for the governor’s budget office, but the final copy was not provided Wednesday. The second agreement is said to provide a no-layoff guarantee to the union in exchange for concessions believed to be worth $50 million to $100 million.

Quinn’s opponent in next month’s election, Sen. Bill Brady, R-Bloomington, has criticized the agreements, saying they will tie his hands if he is elected governor.

Chris Wetterich can be reached at 788-1523.

Highlights

Included in the state’s deal with AFSCME to save $70 million on health-care costs:

* Using generic prescription drugs before brand-name ones

* Establishing a dental preferred provider organization for the first time